IGI Securities Limited – Commodity outlook

The silver markets as you can see went back and forth during the session on Tuesday, showing that the
market is simply stuck in the area between the $16.00 level, and the $16.50 level. With that, the market
looks like it’s ready to continue going lower as IGI Securities Limited runs out of momentum to the upside, and therefore IGI Securities Limited sellers bellows the $16 handle.

IGI Securities Limited believes at that point time the market will then head to the $15 level, and perhaps even lower. IGI Securities Limited does not interest whatsoever in buying, as IGI Securities Limited sees a massive amount of resistance all the way to the $18 handle.

Pivot: 16.15
Support 16.00 15.54 15.24
Resistance 16.55 16.90 17.30

Recommendation

Buy silver positions with targets at 16.55 and 16.9 in extension

Highlights

Physical demand for silver will decline 6.7 percent this year

Driven by a slump in coins and bars, as prices headed for the second straight yearly decline

Silver futures have dropped 16 percent this year after plunging 36 percent in 2013

The Fed last month announced it would end its economic stimulus after gains in the labour market

This year, calculations for physical demand changed to include silver bars

Fundamentals

Silver added 326 points today taking cues from gold which powered up as traders remain undecided about interest rate increases in the US and global growth and demand.

Copper dipped by 5 points easing from Friday’s rally to trade at 3.035. Copper prices will fall next year as a strengthening U.S. dollar and weaker oil prices push down marginal production costs, according to Goldman Sachs Group Inc.

The bank lowered its 2015 price outlook to $6,217 a metric ton from $6,400, analysts including Max Layton said in a report yesterday. Marginal production cost will fall to between $5,600 and $6,300 a ton next year, according to the report.

Analysts attributed the fall in copper futures to weak global cues amid data showing property prices declined a second month in China, the largest metals consumer, and after weaker industrial production data in the US.

Copper slipped on Tuesday from a two-week high marked in the previous session, hurt by concern over China’s sluggish property sector, although expectations of more European monetary stimulus offered support.

Chinese home prices fell for the second consecutive month in October from a year earlier, official data showed on Tuesday, despite government efforts to lift the market. Still, metals have held up moderately well in the face of a downturn in oil and bulk commodities markets, which suggest some investors may be using the complex to hedge against falling prices elsewhere, said analyst Daniel Hynes of ANZ in Sydney.

Demand for silver will post a 7 per cent decline in 2014 because of a slower pace of buying by jewellers and industrial fabricators in the first three quarters of the year, metals consultant Thomson Reuters GFMS said on Tuesday. For the full year, Thomson Reuters GFMS now forecasts silver prices to average $19.

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